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In the year to June, new Woolworths executive Andrew Jennings was paid a total monthly package of R444 000, firmly installing him as the retailer’s second-highest paid manager after chief executive Simon Susman’s R795 000.

October 8, 2007 By Tom Robbins Cape Town – In the year to June, new Woolworths executive Andrew Jennings was paid a total monthly package of R444 000, firmly installing him as the retailer’s second-highest paid manager after chief executive Simon Susman’s R795 000. Jennings, a former Saks Fifth Avenue chief operating officer and now the company’s managing director for retail, has been tasked with implementing his detailed approach to merchandising at the company. While it may still be too early to quantify in any vaguely scientific way what added value he has brought to the Woolworths brand, he faces two key challenges to growing profit. One is fixing the problem of on-shelf “availability” in the company’s highly successful food business. Customers are simply walking into the stores faster than Woolworths can keep them stocked. While the company’s financial 2007 annual report says it has already made progress addressing this, Jennings has made it clear that doing better simply is not good enough. The second area relates to clothing, formerly the core part of the retailer’s business, which appeals to a slightly lower market segment than food. In the years leading up to 2006 the chain simply got what it calls its “taste levels” wrong, pricing some categories, such as children’s wear, above what the market was prepared to pay. Susman said progress had already been made improving the product offering and finding more cost effective sourcing. He emphasised that the group had grown market share in clothing, borne out by an accelerated rise of 16.2 percent in clothing sales. A third opportunity the retailer has identified is better exploiting the different income level target markets within its broad clothing customer base. Added to this is targeting different sub-cultures, such as the trendy youth and middle-aged men with a penchant for snappy business attire. Rand Merchant Bank Asset Management retail analyst Evan Walker believed Jennings was adding a level of finesse to Woolworths’ existing clothing turnaround strategy and, more importantly, believed this expertise extended to driving up the company’s gross margins. Nedcor Securities retail analyst Syd Vianello said he felt “very positive” about Jennings’ ability to execute his highly theoretical approach. But Vianello suspected Jennings would attempt to introduce even more luxury food categories. He questioned whether this was the most productive way to exploit an already relatively up-market food customer base. Jennings will face the challenge of balancing differentiated clothing markets and, more importantly, introducing more monthly shop items, such as cleaning products and toiletries, into its small food stores. But if he gets this right, rival groups will be under even more pressure to hold onto up-market shoppers.